The price of aviation turbine fuel has increased by 50 per cent since January and the situation has adversely impacted IndiGo, its CEO Ronojoy Dutta said on Wednesday.
He said the government should bring aviation turbine fuel (ATF) under the Goods and Services Tax (GST) and make flying affordable for consumers and viable for airlines.
IndiGo is India's largest airline and with around 55 per cent share in the domestic passenger market.
Over the past few weeks, crude oil prices have soared to a seven-year high, nearing USD 140 per barrel, due to the ongoing conflict in Europe, Dutta said in a statement.
“This has resulted in over 50 per cent ATF price hike from January 2022 till date, including the 18 per cent hike today,” he noted.
This situation adversely impacts us, given that ATF constitutes over 45 per cent of our operational costs, he stated.
“We have been in talks with the government to bring ATF under GST as it brings the benefit of input tax credit,” he noted.
IndiGo believes that such measures are needed now more than ever to offset this increase in cost and make flying viable for airlines and affordable for consumers, he said.
“A rationalisation of taxes will result in high growth for the sector, creating a multiplier effect throughout the economy, promoting trade, tourism and job creation,” Dutta noted.
Meanwhile, a Vistara spokesperson said airfares are a function of market dynamics and are decided on the basis of multiple factors like the balance of demand and supply, market sentiment, competition, among others.
“The resumption of scheduled international flights from March 27 is expected to stimulate demand and we hope it will help the industry in managing the increase in ATF prices,” he added.
